A financial stability fund set by a union of sovereign countries (e.g. the European Stability Mechanism), can improve countries's ability to borrow and lend, and to share risks, with respect to debt financing. Efficiency gains arise from the ability of the fund to offer long-term financial...

Over the last three decades we have observed a dramatic increase in the concentration of income at the very top of the distribution. This increase in income inequality has been especially steep in the managerial occupations in financial industries, where it has often been associated with greater...

Presentation of some new results showing how, under very general conditions, the recursive saddle-point method, pioneered by Marcet and Marimon, delivers the appropriate solution for contracting problems with intertemporal incentive constraints, with or without unique solutions. These results...

the problem of general vs. firm-specific human capital investments.

We analyze an economy where banks are uncertain about firms' investment opportunities and, as a result, credit tightness can result in excessive risk-taking. In the competitive credit market, banks announce credit contracts and firms apply to them, as in a directed search model. We show that...

We construct a theory of intergenerational preference transmission that rationalizes the choice between alternative parenting styles (related to Baumrind 1967). Parents maximize an objective function that combines Beckerian and paternalistic altruism towards children. They can affect their...

We develop a theory of the intergenerational transmission of risk preferences. Parents can instill either risk tolerance or risk aversion in their children, and face both altruistic and paternalistic motives in this process. Risk-tolerant children are more likely to benefit from profitable but...

We study the effects of offshoring on wages, welfare and inequality through its impact on technology. To this end, we introduce directed technical change into a model of task-based production and offshoring. A unique final good is produced by combining a skilled and an unskilled intermediate...